Measuring the Environmental Sustainability Performance of Global Supply Chains: a Multi-Regional Input-Output analysis for Carbon, Sulphur Oxide and Water Footprints

Measuring the performance of what an environmentally sustainable supply chain has become a challenge despite the convergence of the underlining principles of sustainable supply chain management. This challenge is exacerbated by the fact that supply chains are inherently dynamic and complex and also because multiple measures can be used to characterize performances.

By identifying some of the critical issues in the literature regarding performance measurements, this paper contributes to the existing body of literature by adopting an environmental performance measurement approach for economic sectors (primary, secondary and tertiary sectors). It uses economic sectors and evaluates them on a sectoral level in specific countries as well as part of the Global Value Chain based on the established multi-regional input-output (MRIO) modelling framework. The MRIO model has been used to calculate direct and indirect (that is supply chain or upstream) environmental effects such as CO2, SO2, biodiversity, water consumption and pollution to name just a few of the applications. In this paper we use MRIO to calculate emissions and resource consumption intensities and footprints, direct and indirect impacts, and net emission flows between countries. These are exemplified by using carbon emissions, sulphur oxide emissions and water use in two highly polluting industries; Electricity production and Chemical industry in 33 countries, including the EU-27, Brazil, India and China, the USA, Canada and Japan from 1995 to 2009. Some of the results highlights include: On average, direct carbon emissions in the electricity sector across all 27 member states of the EU was estimated to be 1368 million tonnes and indirect carbon emissions to be 470.7 million tonnes per year representing 25.6% of the EU-27 total carbon emissions related to this sector. It was also observed that from 2004, sulphur oxide emissions intensities in electricity production in India and China have remained relatively constant at about 62.8 gSOx/$ and 84.4 gSOx/$ although being higher than in other countries. In terms of water use, the high water use intensity in China (1040.27 litres/$) and India (961.63 litres/$), which are among the highest in the sector in the electricity sector is exacerbated by both countries being ranked as High Water Stress Risk countries.

The paper also highlights many merits of the MRIO including: a 15-year time series study (which provides a measurement of environmental performance of key industries and an opportunity to assess technical and technological change during the investigated time period), a supply chain approach that provides a consistent methodological framework and accounts for all upstream supply chain environmental impacts throughout entire global supply chains.

The paper also discusses the implications of the study to environmental sustainability performance measurement in terms of the level of analysis from a value chain hierarchy perspective, methodological issues, performance indicators, environmental exchanges and policy relevance.